They're singing a new tune

MySpace Music gets overhaul to compete

By Ryan Nakashima
| 2 a.m.April 20, 2009

Courtney Holt, 40, took charge of MySpace Music, a joint venture with the major recording labels, three months ago. Rapper will.i.am says Holt is &#8220;one of the few guys that knows the way through the jungle&#8221; of digital music. &#160; (Chris Pizzello / Associated Press)

Courtney Holt, 40, took charge of MySpace Music, a joint venture with the major recording labels, three months ago. Rapper will.i.am says Holt is “one of the few guys that knows the way through the jungle” of digital music. (Chris Pizzello / Associated Press)

BEVERLY HILLS – In 2004, when MySpace was still getting going, recording-label executive Courtney Holt noticed that musicians were using the Web site to connect with their fans, through blogs and behind-the-scenes photos. So Holt arranged to meet MySpace's founders.

“I remember going into his office when we were very small, when most other companies wouldn't pay attention to us,” MySpace co-founder Chris DeWolfe said.

Holt, then a marketing vice president with Interscope Geffen A&M, urged bands such as Nine Inch Nails, Weezer and the Black Eyed Peas to nurture MySpace pages. The bands streamed new songs for free on their MySpace profiles, and some had the best album launches of their careers.

“The artists loved it, and it created a Pied Piper effect for the fans,” Holt said. He realized that when it came to music promotion, MySpace was like a “fire hose.”

Now, Holt is being asked to turn MySpace's attention to a music industry in turmoil – and in the process, to improve the mediocre finances of MySpace as it tries to fend off rival Facebook.

Three months ago, Holt, 40, took charge of MySpace Music, a joint venture with the major recording labels. The service lets MySpace users queue up multiple songs to play on their profile pages, rather than one song as in the past. Users also can create playlists that let them swap songs with their friends.

MySpace Music overhauled its home page, which promotes album releases and tours and corrals 5 million artist profiles into genres. Now the songs also carry links that let people buy downloads from Amazon.com.

The setup gives MySpace and the music industry a share of download sales from Amazon, and it could bring new revenue from ads. Next, Holt plans to make MySpace into a seller of concert tickets and band merchandise, while better targeting songs, ring tones, artists and ads at the people who will be interested in them.

Through these efforts, MySpace's music-promoting power could help bolster the recording business. Even with sales of downloads on the rise, the music industry isn't recouping the revenue lost from falling sales of compact discs.

First, though, Holt has had to do damage control.

The new music player was clunky and slow when it launched. Fans complained that too few songs were available and that playlists couldn't handle enough songs.

Holt directed the creation of a sleeker, faster-to-load version that debuted last month, and he removed the cap on the number of playlists that could be created.

Eventually, Holt wants to build up discussions of artists' discographies on MySpace and foster “social DJs” – playlist creators who are as influential as radio disc jockeys once were.

Black Eyed Peas rapper will.i.am credits Holt with being “one of the few guys that knows the way through the jungle” of digital music.

But Holt has the weight of multiple masters on his back. Aside from the music industry, he has to satisfy Rupert Murdoch, whose News Corp. bought MySpace for $580 million in 2005 but has yet to eke out more than a meager profit from it.

MySpace also has to intrigue its users enough to hold off rival Facebook, which lapped MySpace a year ago in overall users worldwide and now has 200 million to MySpace's 130 million.

MySpace is still the largest social network in the United States, with 70 million users a month, but Facebook is catching up quickly with 61 million, according to tracking firm comScore. MySpace Music could be the differentiator it needs: Facebook lacks a music player and relies on third parties to create them.

In this recession, Holt is in for an uphill slog.

U.S. advertisers have cut back overall, and aren't convinced that social-networking sites are good places for ads, given the highly personal or frivolous content that users post. “Click-through” rates on ads are poor on social-media sites.

“Either you can see a message from a friend who's just broken up with you, or you can see a random ad. Which would you choose?” said Shiv Singh, a vice president at digital advertising firm Razorfish.

Because of this dynamic, growth is slowing for social-network ad spending, which is expected to rise 10 percent this year to $1.3 billion, eMarketer estimates. Social-media sites are expected to have 3.9 percent of the overall online-ad market in 2013, down from 5 percent today.